The relationship between China and Mexico follows a bizarre, commodity-related path. If the economy is politics’ Siamese twin, then trade seems to have coupled with crime. The media have recorded this, alarmed by the monetary value of illegal activities. This month, The Economist revealed the unexpected increase in iron ore sales from Mexico to China (4 million tons, almost three times the 2012 amount). A murky trade relationship hides behind the deliveries, protected by deliveries of ephedrine and other base components needed to produce synthetic drugs in Mexican labs. Huge amounts of iron ore serve to compensate for a few chemical compounds, whose value is exponentially greater. The port is located in Lázaro Cardenas in the heart of the mining area on the Pacific coast; an ideal launching point for trade between East Asia and Latin America. The Chinese port is located on its long southern coast. Even in this case, The Red Dragon imports raw materials and exports goods, but this time sophisticated components produced in modern laboratories with specialized technicians. It’s a profitable example of industrial conversion, even if not the most pure. In any case, the Mexican authorities have decided to try and stop this illegal exchange. Initially, the Mexican Navy seized control of the Lázaro Cardenas port, and Mexico subsequently launched a bilateral diplomatic offensive with Beijing. A lot of buzz recorded the interview conceded to the South China Morning Post—the most important daily newspaper in Hong Kong—with the ex-Mexican ambassador to China. The Mexican diplomat accused the Chinese authorities of doing nothing to repress the production and sale of chemical substances used for methamphetamines in no uncertain terms. With unparalleled candor, he recorded his offers to collaborate with China on the war on drugs, complaining that his requests went unanswered or were at most addressed by limited, propagandistic actions. In particular, the diplomat believes that the Chinese government dismissed the problem as a customs issue for the Mexican police to address in their own country. The barometer of Sino-Mexican relations is probably pointing toward foul weather. Latin America’s battle to inhibit China’s accession to the WTO seems far away. At the time, Mexico City nourished fear regarding unfair or unbeatable competition in mature sectors, especially textiles. The fears of losing competitiveness among destination markets were strong, and furthermore proved true. After 2001, relationships improved progressively. Trade increased and China, especially, invested in Mexico. China aims to secure raw materials and establish productive units in close proximity to the United States, to overcome the border and assault the rich market up north. As a symbol of the rediscovered commercial peace, the first shipment of the best Mexican tequila arrived in China last February after five years of laborious negotiations. Now, drugs are blocking this development, because according to the United Nations, its weight is becoming volatile and the traffic intolerable. The lack of repression, the complicity, and China’s enormous interests in Mexico have enlarged an already nearly uncontrollable flux. The unusual and desperate protests from the Mexican government signal that the time of omissions and useless rhetoric blaming China could lead to diplomatic crisis.

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About Alberto

Alberto Forchielli, born in 1955, received an MBA with honors from Harvard Business School and a bachelor’s cum laude in Economics from the University of Bologna. He is a founding partner of Mandarin Capital Partners, and the founder and president of Osservatorio Asia, a non-profit research center focused on Asia. He is also the founder of T-Island, a consultancy agency specialized in international relocations for professionals. In addition, he guided the expansion of the Roland Berger Foundation to Italy, which provides individual support for talented students lacking means to further their educations.